Summary of Financial Results for Fiscal Year Ended March 2013

Transcription

1 Summary of Financial Results for Fiscal Year Ended March 213 Isetan Mitsukoshi Holdings Ltd., Consolidated Subsidiaries and Affiliated Companies (Millions of yen) FY29 FY21 FY211 FY212 Net sales 1,291,617 1,22,772 1,239,921 1,236,333 Gross profit 36, ,5 347, ,41 Selling, general and administrative expenses 356,58 331,12 323,954 32,771 Operating income 4,177 1,993 23,834 26,639 Recurring income 19,73 27,93 38,452 34,217 Net income (loss) (63,521) 2,64 58,891 25,292 Total assets 1,238,6 1,237,775 1,227,947 1,223,677 Net assets 425,12 418, ,479 55,127 Interest-bearing debt 197, , , ,263 Capital investment 28,256 33,365 19,243 3,499 Depreciation and amortization 22,411 22,933 22,46 21,559 Cash flows from operating activities (3,64) 33,211 57,843 4,438 Cash flows from investing activities 47,443 (24,419) (15,939) (26,312) Cash flows from financing activities (41,688) 11,241 (44,94) 2,339 (%) Gross profit margin Selling, general and administrative margin Operating profit margin Return on assets (ROA) Return on equity (ROE) (14.3) Shareholders equity ratio Interest-bearing debt/total assets (%) (Yen) Net income (loss) per share (162.51) Cash dividend per share (%) Payout ratio

2 Overview of Fiscal 212 The Japanese economy during fiscal 212 ended March 213 showed signs of a modest recovery against a background of such factors as full-fledged public investment accompanying earthquake reconstruction efforts. Additionally, despite positive signs such as a correction of the strong yen and an upward momentum of stock prices from the end of 212, uncertainties about the future remained, including the impact of increases in the consumption tax from 214 onwards. In the department store sector, department store sales were picking up in certain areas owing to a rebound from the adverse impact of the Great East Japan Earthquake in 211 and steady sales of high-end products. Nevertheless, overall net sales for fiscal 212 decreased compared with the previous fiscal year results. Amid this environment, the Isetan Mitsukoshi Group progressed with the creation of a structure that reliably ensures profits through making full use of strengths possessed by the department store business companies and affiliated Group companies as well as the Group s management resources toward the realization of becoming the world s foremost retail service group that continues to grow with high profitability. As a result of the aforementioned initiatives, consolidated net sales for the fiscal year amounted to 1,236,333 million, a decrease of.3% from the previous fiscal year; operating income amounted to 26,639 million, an increase of 11.8%; and recurring income was 34,217 million, a decrease of 11.%. Net income amounted to 25,292 million, a decrease of 57.1%. Net sales by business Other Businesses 1.1% Real Estate Business 1.3% Other Retail & Specialty Store Business 5.8% Department Store Business 9.7% Cost of sales and gross profit on sales (net sales) / Gross profit margin (Millions of yen) (%) 15, 3 125, 1, 36, ,5 347, , Operating income / Operating profit margin (Millions of yen) (%) 3, 3. 26,639 25, 2, 23, , 27 15, 1.5 5, 93, , , , , 1, , 25 5, 4, Credit & Finance Business/ Customer Organization Management Business 1.1% Total assets / Return on assets (ROA) Cash dividend per share (Millions of yen) (%) (Yen) 1,5, 1,2, ,238,6 1,237,775 1,227,947 1,223, , , , Outlook for the Next Fiscal Year By promoting the Isetan Mitsukoshi Group Three-Year Plan, the Isetan Mitsukoshi Group forecasts consolidated net sales of 1,28 billion, an increase of 3.5% from the previous fiscal year; operating income of 3 billion, an increase of 12.6%; recurring income of 33 billion, a decrease of 3.6%; and net income of 22 billion, a decrease of 13.% for fiscal 213 ending March 31, 214. * On August 2, 213, the following upward revisions were made to the forecast of consolidated business results for the fiscal year ending March 214. Net sales: 1,29 billion; Operating income: 32.5 billion; Recurring income: 33.5 billion; Net income: 23.5 billion 12

3 Department Store Business The department store business got off to a smooth start with the grand opening of the Isetan Shinjuku Main store in March 213. The business results of domestic Group department stores outside the Tokyo Metropolitan region have also improved, in which various measures were taken such as newly developing small-size stores to expand and enhance customer contact. As a result, segment sales amounted to 1,122,449 million, a decrease of.5% from the previous fiscal year, and operating income was 18,685 million, an increase of 3.4% from the previous fiscal year. Department stores in the Tokyo Metropolitan region (Isetan Mitsukoshi Ltd.) The three flagship stores, namely, the Isetan Shinjuku Main store, Mitsukoshi Nihombashi Main store and Mitsukoshi Ginza store, are aiming to become a symbol of the department store industry through realizing our aspired image as a department store. In March 213, we realized the grand opening of the Isetan Shinjuku Main store, which we have been redeveloping and opening shops in phases since last year. By designating fashion as art, the store aims to become a fashion museum that will always disseminate new information through original planning and coordination. At the same time, space was created that will appeal to customers five senses by combining tactical information and services. Additionally, by providing a sense of entertainment, the store not only fulfills the purpose of shopping but was also developed into an attractive space in which customers can naturally gather and that touches customers hearts. As a result, many customers visited the store and net sales reached a level that exceeded the target plan. Net sales for the department stores in the Tokyo Metropolitan region during the fiscal year under review amounted to billion, down 1.5% versus the previous fiscal year (year-on-year increase of.2% on existing store basis, excluding the Shinjuku Mitsukoshi ALCOTT store). Additionally, operating income rose 7.5% to 17.8 billion and recurring income increased 35.9% to 19.5 billion from the previous fiscal year. We are also opening new small-size stores to expand and enhance customer contact. In April 212, we opened the Isetan Haneda Store, which mainly offers men s miscellaneous items and food gifts, at Haneda Airport Domestic Terminal No. 1. Additionally, we opened the Isetan Outlet Store at the Sano Premium Outlets in July 212. Other measures toward steady expansion also include opening six Isetan Mirror stores, which is our luxury cosmetics select shop, from March 212 to April 213. Desired Shape in the Medium Term Efforts to Increase Profitability Structural Reform of Supply Chain and Enhancement of Sales Capability The Isetan Mitsukoshi Group established a system for developing products via structural reform of the supply chain together with the grand opening of the Isetan Shinjuku Main store in March 213. An organizational reform was also carried out in April 213 employing a system of separating products and sales in order to dually realize supply chain structural reforms and enhancement of sales capability. With these reforms, we plan to expand our initiatives not only to department stores but also other businesses, including the WEB business and smallsize store business to generate greater results throughout the Group. Aim of separating products and sales In conjunction with strengthening our stores sales line, we aim to concurrently realize higher sales levels and providing products with originality by clarifying products and sales organizational roles. Clarification of vertical sales line Enhance sales capability (sales) Building of store workflow originating from sales Strengthen management of sales managers, which is a resource of store sales capability Building of sales system through scientific approach Optimal allocation of personnel based on sales business analysis Building of new training and development models with new concepts Formalize and develop knowledge of sales behavior and skills of outstanding sales staff (stylists) Training and CDP* 1 according to individual sales staff (stylists) Enhance sales capability and profitability by strengthening the promotion systems of both products and sales Appropriately communicate needs Provide products, sales, development and services Centralization of product procurement function Structural reform of supply chain (products) Structural reform of distribution structure Strengthening of import and inventory management functions Strengthening of internal apparel function Revision of supply terms Product development that realizes high profit margins Outlets Revision of rational business terms Standardization of supply conditions Product development with authorization to decide prices Private brand strategy Exclusive development Increase consumption ratio of purchased products Expansion to SPA* 2 (specialty store retailers) Achieve greater customer satisfaction and further touch their hearts Profit expansion *1 Career Development Program *2 Speciality store retailer of private label apparel 13

4 Net sales by store Mitsukoshi Chiba store 17,343 Millions of yen 2.8% Isetan Fuchu store 2,54 Millions of yen 3.3% Isetan Sagamihara store 25,78 Millions of yen 4.1% Isetan Urawa store 42,964 Millions of yen 6.8% Isetan Matsudo store 21,46 Millions of yen 3.4% Isetan Tachikawa store 38,768 Millions of yen 6.2% Mitsukoshi Ginza store 61,267 Millions of yen 9.8% Mitsukoshi Nihombashi Main store Isetan Shinjuku Main store 236,841 Millions of yen 37.7% Mitsukoshi Nihombashi Main store 163,181 Millions of yen 26.% Isetan Shinjuku Main store Mitsukoshi Ginza store Results of supply chain structural reforms in fiscal 212 Supplier share versus store sales was 1.4% (up 2. percentage points versus fiscal 211). Gross profits increased 2 billion. Expand and promote structural reform of supply chain extending beyond department stores Increase in gross profits through structural reform of supply chain and supplier share 2.% Supplier share Supplier relationships Units Private brand products 1.4% +2.% vs. FY % + 2 billion vs. FY211 (YoY increase of 6 billion) + 7 billion vs. FY211 (YoY increase of 5 billion) + 2 billion vs. FY211 FY212 FY213 plan FY216 plan Expand structural reform of supply chain to WEB and small-size store businesses and strengthen promotion system linked to achieving results across the Group. 14

5 Department Store Business Regional Department Stores Overall sales at domestic Group department stores outside the Tokyo Metropolitan region improved due to making progress in the development and introduction of shared products with originality that utilize the Group s capabilities in addition to cost restructuring efforts of respective companies. As a result, net sales in domestic regional department stores during the fiscal year under review amounted to billion, a decrease of.4% from the previous year, and operating income was 2.5 billion, an increase of 289.% from the previous fiscal year. Sapporo Marui Imai Sendai Mitsukoshi Iwataya Desired Shape in the Medium Term Development, Cultivation and Strengthening of Growth Businesses WEB Business Strengthening of communication in conjunction with stores In the WEB business, we established the joint venture Fashion Headline Ltd. with IID, Inc., whose main business involves the operation of news sites, as of December 212 and launched FASHION HEADLINE, a comprehensive fashion news site. Additionally, in conjunction with the redevelopment of the Isetan Shinjuku Main store, we started our new website, ISETAN PARK net, to deliver information related to the store s personnel, products and services using social media. On this website, we will strengthen measures to realize communication and services that will connect stores with the website and social media with online shopping as of means of providing a new experience for customers. 15

6 Overseas Department Stores For our overseas department stores, we strived to cultivate and deeply penetrate markets in China and Southeast Asia, where continued robust growth is expected. In May 212, we opened a new store, the One Utama Store, in the state of Selangor in Malaysia, making this our fourth store in that country. Additionally, the grand opening of our second store in Tianjin, China, was carried out in January 213. As a result, overall net sales for overseas department stores amounted to 73.2 billion, an increase of 12.6% from the previous fiscal year, and operating income was 1 billion, a decrease of 36.2% from the previous fiscal year. Isetan Kuala Lumpur KLCC store Isetan Tianjin No.2 store Isetan Singapore Serangoon store Isetan Kuala Lumpur One Utama store Desired Shape in the Medium Term Development, Cultivation and Strengthening of Growth Businesses Overseas Business Isetan Mitsukoshi has been developing dominant strategies for overseas thus far with a primary emphasis on existing areas by utilizing our visibility and know-how possessed by existing stores. While continuously promoting this initiative, we will carry out measures to open large- and medium-size stores particularly in Southeast Asia going forward. Additionally, at the Chengdu Isetan No.2 store in China, we plan to make inroads into the property management (PM) business in view of the operation of large shopping centers (SC). Through these measures, we will expand store openings while ensuring a certain scale of store size and content that are able to compete with local large commercial facilities. New store opening plan Isetan Chengdu No.2 store Isetan Chengdu Isetan Chengdu No.2 store (scheduled to open in spring 215) 16

7 Credit & Finance Business / Customer Organization Management Business In the credit & finance business/customer organization management business, we have worked to improve the Group management system to enhance convenience for our customers and build a management foundation that ensures high profitability. MICARD Co., Ltd. worked to expand membership while expanding the use of cards outside department stores, strengthening financial services and building a highly productive business foundation. The company also enhanced customer convenience through various measures such as starting a new Tsunagarimasu service. Under this service, the best discount rate will be applied to all family members whether or not customers are separately responsible for their own finances. Annual purchased amounts can be combined as well. As a result, segment sales amounted to 3,947 million, an increase of 8.4% from the previous fiscal year, and operating income was 3,71 million, an increase of 39.3% from the previous fiscal year. Number of MICARD accounts / Amounts handled by MICARD Number of MICARD accounts Amounts handled by MICARD (Inside and outside department stores) Inside department stores Outside department stores (1, accounts) (1 million yen) 6, 5,125 5,958 6, , 2, 3, ,357 1,987 2,449 FY29 FY21 FY211 FY212 FY29 FY21 FY211 FY212 Desired Shape in the Medium Term Development, Cultivation and Strengthening of Growth Businesses Small-Size Store Business In the small-size store business, as a means of expanding customer contact points by utilizing the strengths of Isetan Mitsukoshi, we will promote new store openings for various store categories to extend our reach into the daily living activities of customers in such locations as expressway service areas. Additionally, in order to accelerate growth, smallsize store departments previously scattered in flagship stores and branch stores were consolidated as the Small-Size Stores Business Department, thereby establishing a structure for the Regional Store Business Department to independently support product policies for small-size stores. Over the medium term, we aim to achieve net sales of 5 billion and operating income of 2.5 billion for small-size stores nationwide. Expand customer contact points by accelerating opening of small-size and medium-size stores Net sales FY213 plan: 25 billion FY215 plan: 35 billion <Expand customer contact points that will utilize strengths> Strengths of Isetan Mitsukoshi Various store formats Locations and formats for considering expansion in the future Locations Transportation hubs (expressways, airports, station buildings) Within other business categories (commercial complexes, shopping centers, outlets) Establish a profit model via Small-Size Stores Business Department New sales channels Points to strengthen in FY213 Product support via Regional Stores Business Department Number of stores FY213 plan: 85 store structure FY215 plan: 15 store structure Currently developing format Mirror Satellite Haneda store Outlet New formats 3m 2 5m 2 medium-size stores Women s, men s, foods and living New business category development via Market and Development Department [Medium-term target] Achieve scale of 5 billion in net sales and operating income of 2.5 billion for small-size stores nationwide. 17

8 Other Retail & Specialty Store Business In the other retail & specialty store business, Isetan Mitsukoshi Food Service Ltd., which operates a supermarket business, worked to raise the satisfaction level of local customers by providing safe and reassuring products and highly original top-quality products that utilize its own self-manufacturing function. In June 212, Isetan Mitsukoshi Food Service opened the Queen s Isetan Fujimino Store. Isetan Mitsukoshi Direct Shopping Ltd. worked to upgrade and expand catalog and TV mail order shopping service businesses. At the same time, as a means of utilizing the strengths of the two companies, Isetan Mitsukoshi Direct Shopping and Japan Post Co., Ltd. started preparations from January 213 directed toward establishing a new company to jointly conduct product procurement and catalog production. As a result, segment sales amounted to 85,745 million, a decrease of 2.2% from the previous fiscal year, and operating loss was 532 million compared with operating income of 375 million in the previous fiscal year. Real Estate Business / Other Businesses Real Estate Business In the real estate business, Isetan Mitsukoshi Building Management Service Co., Ltd. worked to build sales support operations as well as reinforce energy saving and disaster prevention related operations. As a result, segment sales amounted to 32,735 million, an increase of 37.5% from the previous fiscal year, and operating income was 3,526 million, an increase of 291.7% from the previous fiscal year. Other Businesses In the other businesses segment, Isetan Mitsukoshi System Solutions Ltd., which is engaged in data processing services, received orders for system development and operation business for non-group department stores. At the same time, Isetan Mitsukoshi Business Support Ltd., which is engaged in logistics services, and Isetan Mitsukoshi Human Solutions Ltd., which is engaged in personnel services, have worked to strengthen shared service functions. As a result, segment sales amounted to 72,738 million, a decrease of 3.4% from the previous fiscal year, and operating income was 1,19 million, a decrease of 32.6% from the previous fiscal year. Development, Cultivation and Strengthening of Growth Businesses Supermarket Business In the supermarket business, we will utilize the strength of Queen s Isetan by providing high-quality, safe and reassuring products and highly original products that are not being handled by other supermarkets, while also utilizing our self-manufacturing function and conducting store operation reforms to shift toward a highly profitable structure. We will also expand store openings of medium- and small-size supermarkets and Queen s Isetan stores, which is designated as small-size specialty business category, with a focus on urban areas and terminals. Through these measures, we aim to achieve operating income of 1.5 to 2. billion over the medium term. Queen s Isetan Fujimino store Queen s Isetan Musashisakai store Queen s Isetan Mejiro store (Image after completion) 18